The heart of insurance – what enables insurance to function – is risk aversion. It follows from the fact that potential … policyholders are risk averse that sometimes they are also averse to the risk that insurance covering a loss will not be available … providing insurance against these risks. I call this “insurance insurance,” and explore where this way of thinking about the …

We study the optimal insurance design problem. This is a risk sharing problem between an insured and an insurer. The … for the insurance cover. This risk-adjusted premium calculation principle uses the cost-of-capital approach as it is … suggested (and used) by the regulator and the insurance industry. …